An item from today's jobless claims data

[TheStateUofMS]

2.1 million filings. Lay offs still happening.

One thing I picked up on was "continuing claims," which are people applying for unemployment for at least 2 consecutive weeks dropped by 3.6 million people. Maybe I'm reading it wrong, but to me that says 3.6 million folks got re-hired or found another job within the past week.

With unemployment paying up to $600/wk through July, maybe we see a gradual weaning off of unemployment and into employed status through summer.

 

[Jeffreauxdawg]

2.1 million filings. Lay offs still happening.

One thing I picked up on was "continuing claims," which are people applying for unemployment for at least 2 consecutive weeks dropped by 3.6 million people. Maybe I'm reading it wrong, but to me that says 3.6 million folks got re-hired or found another job within the past week.

With unemployment paying up to $600/wk through July, maybe we see a gradual weaning off of unemployment and into employed status through summer.

More layoffs are coming at higher income levels now. All of the service/gig/hourly jobs have shaken out. We are now starting to get into skilled trades, tech, and white collar jobs. Chevron, Boeing, CBS, and American Airlines all made news in the last 24 hours. Big cuts are already happening in silicon valley (Uber, Lyft, AirBNB,etc.) Now it's hospitals. Construction is coming, especially in commercial construction once current projects wrap. Auto related manufacturing is coming soon.

The vast majority of these jobs are at or near 6 figures. $600 a week isn't half of what they make.
This is going to be bad for quite a while.

 

[TheStateUofMS]

Whew hope you're wrong! It's plausible though.

 

[Jeffreauxdawg]

I am becoming more and more bearish in the long-term.

Besides all of the layoffs from low demand. There are a lot of employees that went home to stay with kids and will choose not to go back. Their employers are okay with that because they realize they were a little bit overstaffed. Higher payed boomers are retirement age and they will take buyouts or just flat out get canned, their positions will be replaced over time with younger and cheaper employees.

Now that many companies are cool with work from home... Hello outsourcing. Why do I need to pay a programmer to work from home in the us for $110k a year, when I can pay one to work from home in India for $50k per year?

This unemployment issue is going to be a problem for a long time. Just count on that and be pleasantly surprised if it's not the case.

 

[archdog]

finally some good news out of the virus. Boomers finally get shown the door. 17 off and don't come back.

 

[Jeffreauxdawg]

finally some good news out of the virus. Boomers finally get shown the door. 17 off and don't come back.

They are taking that fat salary with them when they go so don't get too excited.

 

[patdog]

Hell, I just hope it's not worse than he says.

 

[maroonmadman]

More layoffs are coming at higher income levels now. All of the service/gig/hourly jobs have shaken out. We are now starting to get into skilled trades, tech, and white collar jobs. Chevron, Boeing, CBS, and American Airlines all made news in the last 24 hours. Big cuts are already happening in silicon valley (Uber, Lyft, AirBNB,etc.) Now it's hospitals. Construction is coming, especially in commercial construction once current projects wrap. Auto related manufacturing is coming soon.

The vast majority of these jobs are at or near 6 figures. $600 a week isn't half of what they make.
This is going to be bad for quite a while.

Auto related manufacturing in Canton, MS starts up June 1. Auto related manufacturing in north MS has already resumed. How long we will keep going is anyone's guess.

 

[Go Budaw]

I am becoming more and more bearish in the long-term.

Besides all of the layoffs from low demand. There are a lot of employees that went home to stay with kids and will choose not to go back. Their employers are okay with that because they realize they were a little bit overstaffed. Higher payed boomers are retirement age and they will take buyouts or just flat out get canned, their positions will be replaced over time with younger and cheaper employees.

Now that many companies are cool with work from home... Hello outsourcing. Why do I need to pay a programmer to work from home in the us for $110k a year, when I can pay one to work from home in India for $50k per year?

This unemployment issue is going to be a problem for a long time. Just count on that and be pleasantly surprised if it's not the case.

All of that stuff you said would cut jobs, but it would also cut expeditures for big companies and improve their margins. So if you’re looking strictly at the stock market, no big deal....maybe a wash or even a small net gain for equity values. But its obviously a problem for the economy as a whole. Yet another case of the stock market health and overall economic health not being anywhere close to the same thing.

 

[fishwater99]

2.1 million filings. Lay offs still happening.

One thing I picked up on was "continuing claims," which are people applying for unemployment for at least 2 consecutive weeks dropped by 3.6 million people. Maybe I'm reading it wrong, but to me that says 3.6 million folks got re-hired or found another job within the past week.

With unemployment paying up to $600/wk through July, maybe we see a gradual weaning off of unemployment and into employed status through summer.

It's $600 per week on top of what your regular unemployment pays which varies by state.

 

[TheStateUofMS]

The first part of what you said about mom's staying home means they could afford it. They're not going to be hurt financially or not in a way that makes them struggle, or the mom (or stay at home dad) would go back to work or find another job.

If companies just promote younger workers to replace older workers, well that's great! More opportunities for younger people to move up the ladder quicker (pay off student loan debt, buy a first home, etc) AND company's save money on wage costs.

The outsourcing of talent could certainly happen and it will in some instances, however there's also a lot coming back more local including manufacturing as we've seen how depending we have been on critical medicines and PPE from outside the US.

IF all those things held true, I think that's a boon for the economy and the market longer term.

Initially I was saying I think a year from now economy will be 20% smaller. I'm thinking more and more I was too pessimistic. My base case was travel/leisure won't be back anytime soon. Well, there's other types of travel/leisure like doing things outside more, RVing, camping, flying drones, etc. Go take a look at Camping World Stock, Polaris, Winnebago.

Hell, I saw a report yesterday there was a cruise to Antarctica. 3 week cruise and during the height of the outbreak. 80% of folks who had Covid-19 had 0 symptoms, that's right 0 and the population of the cruise ship was not a young one.

 

[PineGroveBully]

Something that I don’t understand how it jives with the current state of things is really good recent numbers and better than projected on new home sales that came out either last week or early this week on new home sales. Is that just a product of incredibly low interest rates? Maybe someone here can explain that.

But as someone whose brother builds houses and and another brother and dad that paints for a lot of new homes it is welcome news. They have all not slowed down during covid and have more work than they can do.

 

[stateskills]

[FONT=&quot]In the week ending May 23, [/FONT][FONT=&quot]the advance figure for seasonally adjusted initial jobless claims was 2,123,000, a decrease of 323,000 from the previous week's revised level. [/FONT]

[FONT=&quot]Setting a clearer picture of how many people are out of work, the insured unemployment rate was 14.5 percent, a decrease of 2.6 percentage points from the previous week's revised rate.[/FONT][FONT=&quot] The advance number for seasonally adjusted insured unemployment was 21,052,000, a decrease of 3,860,000 from the previous week's revised level.

People are going back to work.[/FONT]
[FONT=&quot]
[/FONT]

 

[TheStateUofMS]

Maybe a lot of people don't know this. I was speaking with someone who has worked from home for a long time, so he was completely unaware.

You see all those skyscrapers and other buildings downtown no one is going into any more? They're all still working just working form home.

My point is most qualified home buyers pre virus "lockdowns" have not been that affected financially. Their confidence for sure takes a shot as they go more into a saving mode, but their good credit, down payment, job they never stopped working is still there.

It's ALWAYS the poor folks who are the most affected. 2019 wage data showed the bottom wage earners have the biggest rise their wages. They're seeing the biggest declines now too. Thankfully there's robust short term stimulus for them right now...

Essential Workers kept working and then lots of others who were non-essential still working from home.

I'm not saying there's not been a lot of carnage. There has been. Overall I don't think it was as bad as feared though because of when we ended the lock downs. Couldn't have gone another month.

 

[stateskills]

[FONT=&quot]After a sharp pullback, homebuyers are now piling back into the housing market much faster than expected.[/FONT]

[FONT=&quot]Mortgage applications to purchase a home rose 9% last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s seasonally adjusted index. It was the sixth straight week of gains and a 54% recovery since early April.

[/FONT]
[FONT=&quot]After weakening in March, the volume of new home sales came in much better than expected in April (+1% v. -22% projections).[/FONT][FONT=&quot] Due to economic challenges associated with COVID-19, NAHB was forecasting an additional sales decline in April. However, new home sales estimates from the Census Bureau reveal relatively flat conditions compared to March.[/FONT]

[FONT=Helvetica Neue, sans-serif]Mortgage rates are at all time lows and the available housing stock is strong. Of all those people that wanted to buy homes in Feb, a high percentage of them still do. Anecdotally, I've seen three homes in my neighborhood (south Charlotte) sell within 24 hours of being listed the past two weeks - that's a faster pace than pre-coronavirus.[/FONT]
[FONT=&quot]
[/FONT]

 

[mcdawg22]

I just don’t get it. I understand airlines and restaurants have income that was lost but Gulf Shores reported a 30% increase in occupancy vs last year. Several restaurants that I have talked to say they are having record weeks every week. Fast food places seem packed whenever I drive by them. Lowe’s and Walmart are busier than ever. Pool builders tell me demand is way up. There is money being spent. I think when earnings are reported you are going to see a rebound.

 

[Jeffreauxdawg]

All of that stuff you said would cut jobs, but it would also cut expeditures for big companies and improve their margins. So if you’re looking strictly at the stock market, no big deal....maybe a wash or even a small net gain for equity values. But its obviously a problem for the economy as a whole. Yet another case of the stock market health and overall economic health not being anywhere close to the same thing.

It hurts revenue. That's the biggest deal. That's what causes a recession. We can play 3 card Monte with Fed pumped liquidity, low rates, and earnings for sure, but it will only last for a few quarters. I wouldn't be surprised if we break all time highs in the next few months. But top line revenue is finite.

When we have economic disruption, people get more conservative with what little cash they have, they build debt that has to be repaid into the future, and quit spending as much. You can print all of the money in the world and give it to people, but if they don't spend it we have economic contraction. Without good steady jobs, people won't spend. Unemployment is the single greatest obstacle to economic growth.

 

[57stratdawg]

I think some of it has to do with timing & interest rates. March 2020 was down like 15%. So, April just basically kept pace with March, but it was still down quite a bit YOY.

Most people move in the summer. I wonder if schools closing moved that seasonality up some.

 

[TheStateUofMS]

It's crazy isn't it? I can't believe how folks changed on a dime.

Pent up demand I guess.

By the way, the folks who lost their hospitality job (99% of them at least), weren't going to be taking their families on expensive vacations.

 

[TheStateUofMS]

I can't wait to see the NY/NJ net migration numbers....gonna be even worse than usual.

 

[Jeffreauxdawg]

A couple of more things to think about:

How many people are going to be laid off on July 1st because of the end of PPP employment?

How much pent up demand is being exhausted right now because of the lockdown? Will it be sustainable in a world that doesn't have subsidized unemployment insurance, PPP, ongoing stimulus checks, or mortgage/rent/student loan forbearance?

 

[Trojanbulldog19]

retail store i work for really hasn't missed a beat. never fully closed. just reduced hours. only furloughed a few employees for about 2 weeks. but since that point it's been record sales. doesn't make much sense but people are spending like crazy. maybe that will taper off now that higher end jobs are getting cut. maybe it will taper off once things get back to more normal and more people are working back in the office again. i'm not sure. some retail closed completely. some have filed for bankruptcy and some have closed for good. It's kind of crazy what it has closed and what it hasnt'. i never stopped working for my other job either. it's been pretty steady with work.

 

[Jeffreauxdawg]

It's crazy isn't it? I can't believe how folks changed on a dime.

Pent up demand I guess.

By the way, the folks who lost their hospitality job (99% of them at least), weren't going to be taking their families on expensive vacations.

Don't be so sure they didn't go on vacation. Those people are making more money on unemployment. 60% of current unemployed are making more money now than when they were working. 20% of unemployed are making double. That's crazy...

 

[WilCoDawg]

As long as they don’t come south and ruin our states they they did their old ones.

 

[fishwater99]

Don't be so sure they didn't go on vacation. Those people are making more money on unemployment. 60% of current unemployed are making more money now than when they were working. 20% of unemployed are making double. That's crazy...

It's 68%

https://www.yahoo.com/finance/news/...onomic-recovery-top-strategist-170003331.html

 

[TheStateUofMS]

It'll probably be NC and FL. I spent my HS years in Winston Salem, NC and my parents still live there and it's flooded with transplants from NY.

Obviously FL has it's share of New Yorkers. We have a lot of former NY Fire Fighters down here. Fire Fighters generally have really good retirement packages and they're fun guys to be around.

 

[Jeffreauxdawg]

It's 68%

https://www.yahoo.com/finance/news/...onomic-recovery-top-strategist-170003331.html

Right. It's even more than I suggested. And check out this map.. Unemployed average 166% more income right now in Mississippi.

View attachment 16284

That's why I think this "recovery" in the market is temporary. Nobody will want to go back to work to take a huge pay cut. So the long term future shakes out like this... Republicans will not continue to pay for all of the "handouts." Over my dead body was Lindsey Graham's quote a while back about extending unemployment. So people will reluctantly go back to lower paying jobs or rely on state unemployment pretty soon.

Democrats will promise it forever as long as you elect me. So, it's a binary problem for the market. Republicans hold the Senate and White House and all of the stimulus goes away sooner than later. Democrats win and keep the stimmy rolling, but raise taxes on high net worth individuals, capital gains, and corporations. Seems like bad news either way for the market.

 

[randystewart]

Sure, there are some things doing well, but that is far from the norm. Beach communities are booming because it was pretty much the first place you could go, and I'm sure their restaurants have done very well compared to a typical May. That is an extreme anomaly though. Up to 50% of non-chain restaurants and retail are still estimated to not make it until 2021, and as someone else pointed out when PPP runs out that'll be the trigger for most of that.
For the most part spending is down across the board drastically. My wife and I both have good jobs and our credit card bill in a typical month was around 8k pre COVID. The past couple of months we've been under 3k. Many in my company have been laid off and the rest of us are working on 80% pay. This is also in an industry (IT) that was supposed to be immune from the downturn. Most of our cuts have come in the past 2 weeks, so while delayed a bit it is still hitting us. Our Q2 numbers look catastrophic as do many others in our space that I've been talking to. None of our clients or prospects are doing anything more than "staying operating" right now from an IT standpoint. No new projects, scheduled projects cancelled or pushed out, etc...

 

[PineGroveBully]

I don’t know who drew that map but that’s not where Alaska goes

 

[bruiser.sixpack]

Drawing SSI and a small pension while working part time. If the government wants to bump my SSI up about $800 per month, I’ll get out of the work force and let someone Younger fill my Spot full time.

Edited to add that I have cleaned my clubs, looking for a new driver and ready to drop out of work force and play 2 to 3 days per week.